_Overview A new Executive Advocate program helps small business owners in Texas achieve rapid results that multiplies their business valuation. The program uncovers the gaps in value drivers and maps their closure. Problem Encountered A small business owner had grown tried of her business (Burn Out) and was seeking more interesting opportunities. We were asked to evaluate the potential of selling the business. At that time EBITDA was $113,827. A business valuation, based on the Murphy Business Broker Opinion of Value (BOV) technology, was used to create a baseline value.

The problem facing this business owner was existing debt, which roughly equaled the BOV results. To sell the business now would mean losing her current job, paying off the debt, and then having no funds to build the next job or to retire. The business needed a higher cash flow to pay down the debt and increase the selling price. Then the owner would have sufficient capital for her future plans.Our Solution Murphy Business Services was engaged to develop a Strategic Marketing Execution Map (SMEM). Business owners are engaged in many activities; but not all of them drive business values. The SMEM approach looks at those business functions and defines gaps between current performance and desired performance.

In this case, activities related to cash flow were causing the gaps. The owner already had many ideas on how to generate additional revenues, reduce the cost of goods sold, and better manage overhead expenses. When faced with defining performance gaps, these ideas solidified into tasks and goals that could be directed to the staff. Results The power of an organization with goals everyone understands cannot be understated. Having a Business Model everyone understands produces results. Increased revenues, better margins, reduced overheads all worked together to increase cash flow. In less than a year, this same business had an EBITDA $221,578, an increase of $107,751.

To understand how this effects the business valuation, it's important to understand that value is related to the risks involved in a change of business owners. Doubling the EBITDA will double the value no matter what multiples are used!

If the business is generating a cash flow from its internal systems, it's worth much more than one that relies on the skills of it owner. This area was also a gap identified by the SMEM. With new systems in place, this business also represented a reduced risk for a business buyer, raising the appropriate EBITDA multiples. In fact. the business valuation more than doubled and finding interested acquirers was easy.

The new problem facing this business owner is what to do after selling the business. Now that values are climbing so she can finance many business opportunities, which one should she pursue? She is currently engaged in an Executive Advocate Reinvention program that develops a Personal Business Model for her to use in deciding on her next career step.

An online Contact Us form is available to specifically request more information about Executive Advocate programs appropriate to your career situation.

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Author

Bob Fariss writes about the issues facing Executives in career development. He teaches Business Model Thinking and also represents individuals with an entrepreneurial flair seeking to sell, buy, or start-their own business.